Affordable Housing, Housing Policy Briefs, Reports and Publications

New Report Explores the Development Costs of LIHTC

November 28, 2018

National Council of State Housing Agencies (NCSHA)

Earlier this fall, the National Council of State Housing Agencies (NCSHA) released a comprehensive study of development costs for affordable housing units developed using the Low Income Housing Tax Credit (LIHTC). The researchers determined the median total development cost per unit placed in service between 2011 and 2016 using LIHTC was $164,757, adjusted for inflation. In New England, the median total development cost per unit was significantly higher at $234,101.

NCSHA found several factors affected the costs of development: location, development and unit size, and development type. First, properties developed in metropolitan areas, cities, difficult development areas, and qualified census tracts were typically costlier to develop. Second, NCSHA found that costs were typically higher in developments with fewer units, as well as higher in units with more square footage (2.5 or more bedrooms). Third, the report found that the type of development was a primary factor affecting costs, noting that development costs are typically higher in new construction.

The data for this research was collected from LIHTC syndicators and represented approximately 47% of the units developed using the 9% tax credit and 20% of the units using the 4% tax credit.